Jet Genius Holdings, which sells private jet charter flights and memberships under Charter Flight Group, is the subject of a partner lawsuit alleging fraud and unpaid taxes.
A partner in Jet Genius Holdings, Inc., which sells private jet charter flights and memberships under the Charter Flight Group FlyCFG banner as well as The Jet Agency, JetXchange, and JetCharter.com, is suing the majority owner, Jordan Brown.
The lawsuit, filed by Aaron Stanz, a shareholder in the company who also goes by Angel, alleges fraud, including millions of dollars in unpaid Federal Excise Tax and misappropriation of funds.
“The reason why we are filing this lawsuit is we want to make sure the IRS gets paid,” said San Diego-based Wade A. Miller of Wade Miller Law, who represents Stanz.
However, Stanz, who serves as Chief Technology Officer, has twice settled previous fraud allegations by the government against him and the companies he was running.
In May 2018, Stanz was charged by the SEC with defrauding investors by making exaggerated and misleading claims about the medical marijuana company’s business operations and financial condition. The case was settled without Stanz admitting or denying the SEC’s allegations
In 2009, Stanz was cited by the Attorney General of Illinois for “alleged phone cramming operations..that placed unauthorized charges on the phone bills of thousands of Illinois consumers, small businesses and local governments.” As part of the settlement, Stanz agreed to cease participating in the alleged deceptive practices.
Stanz says it is those brushes with the law that led him to file the lawsuit against Brown.
He tells Private Jet Card Comparisons, “I learned a valuable lesson to be mindful of regulations. It’s because of these lessons I knew I couldn’t sit idly by. I have a duty to report these things. At whatever expense this comes to me, I have an obligation to represent the company in the best light.”
This lawsuit, filed Monday in California, names the defendants as Jordan Brown, individually and in his capacity as CEO, Director, and Chairman of co-defendant Jet Genius Holdings, Inc., Jet Genius Florida Holdings, Inc., C3jets LLC, Bowman Aviation LLC, and Does 1-20.
According to the filing, “Through intimidation and under duress, Plaintiff was forced to surrender his Board oversight, remove his rights as a shareholder, and reduce his equitable shareholdings and years-long efforts in his own company by way of a fraudulent promise and contract by the Defendants to pay millions of dollars they owe to the Internal Revenue Service (“IRS”) for unpaid Federal Excise Tax (“FET”), which the Defendants failed to pay and have now subjected the Plaintiff to imminent irreparable injury.”
The lawsuit alleges after Stanz and others confronted Brown about the unpaid taxes in 2018, he instead moved to form a new company in Florida.
It also alleges Stanz “under duress” reduced his holdings from 49.5% to 25% “on the condition that revenue would be used to pay the taxes owed to the IRS and that valuable intellectual property would not be transferred without proper documentation or compensation to Plaintiff.”
The lawsuit claims Brown has generated over $125 million via the new company without sharing profits with existing partners.
It also alleges that Brown gained $3.3 million through a loan “to himself individually, all while hiding this activity from the IRS while it continued to increase its attempts to assess and collect its unpaid FET.”
Stanz is seeking damages in the amount of “more than $125,000,000 in unjustly enriched revenue” and restoration of his shareholdings to its previous 49.5%.
He also seeks $909,451 for any purported transfer in breach of the Shareholder Agreement which is found to have occurred prior to November 1, 2019; $727,561 for any purported transfer in breach of the Shareholder Agreement which was found to have occurred prior to November 1, 2020; $545,671 for any purported transfer in breach of the Shareholder Agreement which was found to have occurred prior to November 1, 2021, and $363,780 for any purported transfer in breach of the Shareholder Agreement which was found to have occurred prior to November 1, 2022.
The plaintiff also wants a full forensic accounting of company books, plus Exemplary and Punitive Damages in an amount to be determined at trial.
Reached by Private Jet Card Comparisons, Brown said on the advice of his lawyer, he declined to comment.
According to his LinkedIn profile, Jet Genius Holdings was formed in 2013, while Charter Flight Group was founded in 2012.
Last year, Charter Flight Group put its fixed-rate jet card on hiatus, opting for a wholesale pricing approach with fixed mark-ups.
